Pinnacle Financial Reports Record Earnings; Assets Grow to $727 Millio

Pinnacle Financial Reports Record Earnings; Assets Grow to $727 Million and Earnings Per Share Are $0.61

    Business Editors

    NASHVILLE, Tenn.--(BUSINESS WIRE)--Jan. 18, 2005--Pinnacle Financial Partners Inc. (NASDAQ: PNFP) today reported another record year in earnings. The company reported net income for the year ended December 31, 2004, of $5,319,000, or $0.61 per diluted share, an increase of 91 percent when compared to Pinnacle's net income of $2,555,000, or $0.32 per diluted share for the year ended December 31, 2003. The company also reported net income of $1,689,000, or $0.18 per diluted share, for the quarter ended December 31, 2004, an increase of 64 percent when compared to Pinnacle's net income of $858,000, or $0.11 per diluted share for the same quarter last year.
    Return on average assets for the quarter ended December 31, 2004, was 0.95 percent compared to 0.75 percent for the same quarter last year. Return on average stockholders' equity for the quarter ended December 31, 2004, was 11.61 percent compared to 10.02 percent for the same quarter last year. The firm's efficiency ratio (noninterest expense divided by net interest income and noninterest income) improved to 55.7 percent during the fourth quarter of 2004 compared to 67.9 percent during the fourth quarter of 2003.
    Total assets grew to $727 million as of December 31, 2004, up $229 million or 46 percent from the $498 million reported at December 31, 2003. Loans as of December 31, 2004, were $472 million, or 59 percent higher than the $297 million reported at December 31, 2003. Total deposits increased to $571 million at December 31, 2004, or 46 percent higher than the $391 million reported at December 31, 2003.
    "We are very pleased with our earnings performance for 2004," said M. Terry Turner, President and CEO of Pinnacle Financial Partners. "We also experienced extraordinary growth in loans, deposits and total assets which escalated throughout 2004 and should provide great momentum for 2005."
    Net interest income for the year ended December 31, 2004, was $20.3 million compared to $12.9 million for the same period in 2003. Net interest income for the quarter ended December 31, 2004, was $6.3 million compared to $3.9 million for the quarter ended December 31, 2003. The net interest margin for the fourth quarter of 2004 was 3.78 percent, which was higher than the net interest margin of 3.62 percent reported during the third quarter in 2004. The percentage of daily floating rate loans to total loans was 55.1 percent at December 31, 2004, compared to 55.8 percent at September 30, 2004, and 52.7 percent at December 31, 2003.
    The provision for loan losses was $2,948,000 for the year ended December 31, 2004 compared to $1,157,000 for the year ended December 31, 2003. The provision for loan losses was $1,134,000 for the fourth quarter of 2004 compared to $204,000 in the fourth quarter in 2003. The provision for loan losses was significantly higher in 2004 due to loan growth in 2004 of $175 million compared to loan growth of $87 million in 2003. Additionally, the company recorded net charge-offs of $1,016,000 in 2004 compared to net charge-offs of $115,000 during 2003. The allowance for loan losses represented 1.20 percent of total loans at December 31, 2004. Net charge-offs to average loans for 2004 amounted to 0.27 percent for the year ended December 31, 2004 compared to 0.05 percent for the year ended December 31, 2003. Nonaccrual loans as a percentage of total loans decreased to 0.12 percent at December 31, 2004 from 0.13 percent at December 31, 2003.
    "During the fourth quarter of 2004, we recorded partial charge-offs for two commercial loans," said Mr. Turner. "The combined charge-offs amounted to $884,000. These actions resulted in an increase in our net charge-off ratio for 2004 but also resulted in reductions in the level of nonperforming loans, the ratio of nonperforming assets to total loans, the percentage of loans past due 30 days or more and the percentage of criticized/classified loans to total loans."
    Noninterest income for the year ended December 31, 2004, was $5.5 million compared to $3.3 million during the same period in 2003. Noninterest income for the quarter ended December 31, 2004, was $1,386,000 compared to $924,000 during the same quarter in 2003. These increases were due to the further development of Pinnacle's mortgage origination unit, gains recognized on the sale of loans, increased service charges due to more deposit accounts and increased investment services income from Pinnacle Asset Management. For the quarter ended December 31, 2004, noninterest income represented approximately 18.0 percent of total revenues (the sum of net interest income and noninterest income), compared to 19.2 percent for the same quarter in 2003.
    Noninterest expense for the year ended December 31, 2004, was $15.3 million compared to $11.0 million for the same period in 2003, an increase of 38 percent. Noninterest expense for the quarter ended December 31, 2004, was $4.3 million compared to $3.3 million for the same quarter in 2003. When compared to the third quarter of 2004, noninterest expenses were $263,000 higher in the fourth quarter of 2004. This increase from the third quarter to fourth quarter is attributable to increased occupancy and equipment expenses and increased legal, accounting and consulting costs.
    Compensation expenses were $2.4 million in the fourth quarter of 2004 compared to $2.5 million for the third quarter of 2004, a reduction of $149,000. Compensation expenses were less in the fourth quarter of 2004 as compared to the third quarter of 2004 due to reduced costs associated with the firm's annual cash incentive plan. Virtually all associates participate in the annual cash incentive plan and awards from the plan were based on 2004 year-end results. Pinnacle has and will continue to increase expense levels over time in order to capitalize on current and future market opportunities and to provide the necessary infrastructure to support our growth.

    OTHER 2004 HIGHLIGHTS

--	Pinnacle currently has 123 associates with 87 working in client contact areas and 36 in operational and corporate areas, an increase of 33 employees since December 31, 2003. Approximately 34 associate additions are currently planned for 2005 with 22 to be in customer contact areas.
--	During the third quarter of 2004, the firm successfully completed its second follow-on stock offering, issuing 977,500 common shares at $20 per share. The offering resulted in net proceeds of $17.2 million in additional capital to support the future growth of the firm.
--	Pinnacle was named by the Nashville Business Journal as the "Best Place to Work" among Middle Tennessee's large companies. This is the second year for Pinnacle to receive top honors in the annual awards program.
--	Today, Pinnacle opened its seventh office, located in Franklin, Tenn., which is the county seat of Williamson County. The Franklin office is the firm's third office in Williamson County, which has the highest per capita income and one of the highest growth rates of all Tennessee counties.
--	The firm opened its sixth office, located in the West End area of Nashville, during the third quarter of 2004. This office is located adjacent to Vanderbilt University and is in close proximity to Nashville's medical community, including several prominent hospitals and medical office facilities. Pinnacle has also created a financial services unit focused on medical practices. This new unit is based in its West End location with five associates focused on serving this particular business sector.
--	Pinnacle has completed negotiations on the site for its eighth office to be located in the Hendersonville, Tenn., area, northeast of Nashville's central business district. The firm anticipates this office to be open in mid-2005. Additionally, the firm is considering a ninth location to be opened in late 2005 in the Nashville MSA. Pinnacle expects to add another two offices in the Nashville MSA in 2006, which would bring the company's total number of offices to 11.

    INVESTMENT OUTLOOK

    Management has developed several financial forecast scenarios for the next several quarters. Based on anticipated growth trends and future investments in the franchise, Pinnacle estimates its first quarter 2005 diluted earnings per share will approximate $0.17 to $0.19. Pinnacle estimates diluted earnings per share for the year ending Dec. 31, 2005, to be $0.82 to $0.88. Additionally, Pinnacle is estimating that its ending total asset balances will approximate $900 million by the end of 2005 as a result of continued organic growth. As noted previously, management has developed several scenarios under which these estimates can be achieved and believes these estimates to be reasonable based on these scenarios. However, unanticipated events or developments, including the execution of any initiative involving the development of any market other than the current Nashville franchise, the opportunity to hire more seasoned professionals than anticipated or the ability to grow loans significantly in excess of the levels contemplated, may cause the actual results of Pinnacle to differ materially from these estimates. Additionally, the estimates are inclusive of anticipated compensation expenses in the third and fourth quarters of 2005 related to the expensing of stock options that have been and may be granted to employees under the firm's broad-based stock option plans. Pinnacle estimates that the anticipated compensation expense attributable to the expensing of stock options will approximate $0.02 to $0.03 per fully diluted share in the last six months of 2005.

    Pinnacle Financial Partners, the largest financial services firm headquartered in Nashville, provides a full range of banking, investment and insurance products and services targeted at small- to mid-sized businesses and their owners/operators. A number of Pinnacle's senior financial advisors provide comprehensive wealth management services to help clients increase, protect and distribute their assets.
    Pinnacle opened its first office in October 2000 in Commerce Center in Downtown Nashville. Since then the firm has added Nashville offices in the Rivergate, Green Hills and West End areas and offices in Brentwood, Cool Springs and Franklin areas of Williamson County.
    Additional information concerning Pinnacle can be accessed at www.mypinnacle.com.

    Certain of the statements in this release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"). The words "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate" and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking. All forward-looking statements are subject to risks, uncertainties and other facts that may cause the actual results, performance or achievements of Pinnacle to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, without limitation, (i) unanticipated deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses, (ii) increased competition with other financial institutions, (iii) lack of sustained growth in the economy in the Nashville, Tennessee area, (iv) rapid fluctuations or unanticipated changes in interest rates, (v) the inability of Pinnacle to satisfy regulatory requirements for its expansion plans, (vi) the inability of Pinnacle to execute its branch expansion plans and (i) changes in the legislative and regulatory environment. A more detailed description of these and other risks is contained in Pinnacle's most recent annual report on Form 10-KSB. Many of such factors are beyond Pinnacle's ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. Pinnacle disclaims any obligation to update or revise any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - UNAUDITED Dec. 31, Dec. 31, 2004 2003 ------------ ------------ ASSETS

Cash and noninterest-bearing due from banks $ 15,243,796 $ 13,768,278 Interest-bearing due from banks 379,047 1,180,371 Federal funds sold 11,122,944 32,235,401 ------------ ------------ Cash and cash equivalents 26,745,787 47,184,050

Securities available-for-sale, at fair value 183,844,314 139,944,238 Securities held-to-maturity (fair value of $27,134,913) 27,596,159 -

Mortgage loans held-for-sale 1,634,900 1,582,600

Loans 472,362,219 297,004,110 Less allowance for loan losses (5,650,014) (3,718,598) ------------ ------------ Loans, net 466,712,205 293,285,512

Premises and equipment, net 11,130,671 6,911,359 Other assets 9,475,414 9,512,899 ------------ ------------ Total assets $727,139,450 $498,420,658 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits: Noninterest-bearing demand $114,318,024 $ 60,796,396 Interest-bearing demand 51,751,320 31,407,213 Savings and money market accounts 199,058,240 140,383,878 Time 205,599,425 157,981,525 ------------ ------------ Total deposits 570,727,009 390,569,012 Securities sold under agreements to repurchase 31,927,860 15,050,110 Federal Home Loan Bank advances 53,500,000 44,500,000 Subordinated debt 10,310,000 10,310,000 Other liabilities 2,794,406 3,655,155 ------------ ------------ Total liabilities 669,259,275 464,084,277

Stockholders' equity: Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding - - Common stock, par value $1.00; 20,000,000 shares authorized; 8,389,232 issued and outstanding at December 31, 2004 and 7,384,106 issued and outstanding at December 31, 2003 8,389,232 7,384,106 Additional paid-in capital 44,376,307 26,990,894 Unearned compensation (37,250) - Retained earnings (accumulated deficit) 5,127,023 (189,155) Accumulated other comprehensive income, net 24,863 150,536 ------------ ------------ Total stockholders' equity 57,880,175 34,336,381 ------------ ------------ Total liabilities and stockholders' equity $727,139,450 $498,420,658 ============ ============

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED

Three months ended Year ended Dec. 31, Dec. 31, 2004 2003 2004 2003 -------- --------- --------- --------- Interest income: Loans, including fees $6,285,348 $3,714,091 $19,909,900 $13,709,159 Securities, available-for-sale Taxable 1,989,532 1,401,480 6,935,902 4,158,064 Tax-exempt 180,992 79,022 490,757 217,284 Federal funds sold and other 117,826 49,408 342,470 177,404 -------- --------- --------- --------- Total interest income 8,573,698 5,244,001 27,679,029 18,261,911 -------- --------- --------- --------- Interest expense: Deposits 1,836,505 1,087,724 5,829,395 4,349,365 Securities sold under agreements to repurchase 49,995 23,483 104,085 65,716 Federal funds purchased and other borrowings 409,199 240,220 1,481,072 948,023 -------- --------- --------- --------- Total interest expense 2,295,699 1,351,427 7,414,552 5,363,104 -------- --------- --------- --------- Net interest income 6,277,999 3,892,574 20,264,477 12,898,807 Provision for loan losses 1,134,101 203,920 2,948,423 1,157,280 -------- --------- --------- --------- Net interest income after provision for loan losses 5,143,898 3,688,654 17,316,054 11,741,527

Noninterest income: Service charges on deposit accounts 249,426 153,863 955,851 513,074 Investment services 398,180 341,231 1,656,743 998,119 Fees from origination of mortgage loans 378,254 177,848 1,254,836 666,853 Gain on loans sold (1) 56,354 132,783 513,646 334,249 Gain on sale of investment securities, net - - 357,196 247,978 Other noninterest income 304,229 118,049 734,449 527,207 -------- --------- --------- --------- Total noninterest income 1,386,443 923,774 5,472,721 3,287,480 -------- --------- --------- --------- Noninterest expense: Compensation and employee benefits 2,391,965 2,250,040 9,540,641 7,260,982 Equipment and occupancy 777,221 504,258 2,405,613 1,827,260 Marketing and other business development 143,998 123,071 606,841 386,905 Postage and supplies 114,948 74,517 492,254 347,684 Other noninterest expense 838,824 315,491 2,252,233 1,225,791 -------- --------- --------- --------- Total noninterest expense 4,266,957 3,267,377 15,297,582 11,048,622 -------- --------- --------- --------- Income before income taxes 2,263,385 1,345,051 7,491,193 3,980,385 Income tax expense 574,505 486,826 2,172,283 1,425,746 -------- --------- --------- --------- Net income $1,688,880 $ 858,225 $ 5,318,910 $ 2,554,639 ======== ========= ========= ========= Per share information: Basic net income per common share $ 0.20 $ 0.12 $ 0.69 $ 0.35 ======== ========= ========= ========= Diluted net income per common share $ 0.18 $ 0.11 $ 0.61 $ 0.32 ======== ========= ========= ========= Weighted average shares outstanding: Basic 8,389,232 7,384,106 7,750,943 7,384,106 Diluted 9,448,696 8,114,888 8,698,139 7,876,006 (1) During the third quarter of 2004, the company recognized $280,000 in gains from the sale of a single loan.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED (dollars in thousands, except per share data) Dec. Sept. June 2004 2004 2004 --------- --------- ---------- Balance sheet data, at quarter end: Total assets $ 727,139 685,408 586,313 Total loans 472,362 434,909 355,267 Allowance for loan losses (5,650) (5,434) (4,466) Securities 211,440 191,323 165,528 Total deposits 570,727 541,859 467,321 Securities sold under agreements to repurchase 31,928 22,958 23,772 Advances from FHLB 53,500 51,500 47,500 Subordinated debt 10,310 10,310 10,310 Total stockholders' equity 57,880 56,668 35,125

Balance sheet data, quarterly averages: Total assets $ 707,131 618,694 555,437 Total loans 448,611 392,220 343,974 Securities 203,728 183,721 169,192 Total earning assets 670,839 589,554 527,070 Total deposits 562,936 485,300 439,964 Securities sold under agreements to repurchase 23,520 25,953 17,523 Advances from FHLB 48,022 49,000 45,736 Subordinated debt 10,310 10,310 10,310 Total stockholders' equity 57,721 43,868 35,542

Statement of operations data, for the three months ended: Interest income $ 8,574 7,214 6,225 Interest expense 2,296 1,915 1,689 --------- --------- ---------- Net interest income 6,278 5,299 4,536 Provision for loan losses 1,134 1,012 449 --------- --------- ---------- Net interest income after provision for loan losses 5,144 4,287 4,087 Noninterest income 1,386 1,678 1,183 Noninterest expense 4,267 4,004 3,615 --------- --------- ---------- Income before taxes 2,263 1,961 1,655 Income tax expense 574 570 487 --------- --------- ---------- Net income $ 1,689 1,391 1,168 ========= ========= ========== Per share data: Earnings - basic $ 0.20 0.18 0.16 Earnings - diluted $ 0.18 0.16 0.14 Book value at quarter end (1) $ 6.90 6.75 4.74

Weighted avg. shares - basic 8,389,232 7,832,512 7,397,920 Weighted avg. shares - diluted 9,448,696 8,857,015 8,279,114 Common shares outstanding 8,389,232 8,389,232 7,404,586

Capital ratios (2): Equity to total assets 8.0% 8.3% 6.0% Leverage 9.7% 10.9% 8.4% Tier 1 risk-based 11.7% 12.4% 10.2% Total risk-based 12.7% 13.4% 11.2%

Investor information: Closing sales price $ 22.62 21.50 18.30 High sales price during quarter $ 25.10 23.70 18.67 Low sales price during quarter $ 22.05 17.70 13.50

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED (dollars in thousands, except per share data)

Mar. Dec. Sept. 2004 2003 2003 --------- --------- ---------- Balance sheet data, at quarter end: Total assets 541,052 498,421 440,693 Total loans 323,416 297,004 279,702 Allowance for loan losses (4,042) (3,719) (3,492) Securities 162,315 139,944 115,421 Total deposits 437,601 390,569 347,191 Securities sold under agreements to repurchase 14,699 15,050 19,291 Advances from FHLB 40,500 44,500 39,500 Subordinated debt 10,310 10,310 - Total stockholders' equity 36,266 34,336 33,245

Balance sheet data, quarterly averages: Total assets 508,260 454,700 406,142 Total loans 306,549 283,387 269,703 Securities 149,802 137,243 107,162 Total earning assets 482,572 432,691 386,823 Total deposits 402,603 356,030 314,302 Securities sold under agreements to repurchase 14,868 16,013 16,136 Advances from FHLB 42,379 43,630 40,239 Subordinated debt 10,310 655 - Total stockholders' equity 35,705 33,935 32,542

Statement of operations data, for the three months ended: Interest income 5,666 5,244 4,702 Interest expense 1,514 1,351 1,317 --------- --------- ---------- Net interest income 4,152 3,893 3,385 Provision for loan losses 354 204 318 --------- --------- ---------- Net interest income after provision for loan losses 3,798 3,689 3,067 Noninterest income 1,225 924 1,024 Noninterest expense 3,412 3,268 2,863 --------- --------- ---------- Income before taxes 1,611 1,345 1,228 Income tax expense 540 487 441 --------- --------- ---------- Net income 1,071 858 787 ========= ========= ========== Per share data: Earnings - basic 0.15 0.12 0.11 Earnings - diluted 0.13 0.11 0.10 Book value at quarter end (1) 4.91 4.65 4.50

Weighted avg. shares - basic 7,384,106 7,384,106 7,384,106 Weighted avg. shares - diluted 8,213,730 8,114,888 7,944,654 Common shares outstanding 7,384,106 7,384,106 7,384,106

Capital ratios (2): Equity to total assets 6.7% 6.8% 7.5% Leverage 9.0% 10.5% 8.2% Tier 1 risk-based 11.2% 11.8% 9.6% Total risk-based 12.1% 12.8% 10.6%

Investor information: Closing sales price 15.25 11.75 9.88 High sales price during quarter 15.50 12.95 9.97 Low sales price during quarter 11.65 9.68 8.00

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED (dollars in thousands, except per share data)

Dec. Sept. June Mar. Dec. Sept. 2004 2004 2004 2004 2003 2003 ----- ----- ----- ----- ----- -----

Performance ratios and other data:

Return on average assets 0.95% 0.89% 0.82% 0.85% 0.75% 0.77% Return on average stockholders' equity 11.61% 12.58% 12.83% 12.03% 10.02% 9.59% Net interest margin (3) 3.78% 3.62% 3.51% 3.49% 3.62% 3.51% Noninterest income to total revenue (4) 18.1% 24.1% 20.7% 22.8% 19.2% 23.2% Noninterest income to avg. assets 0.78% 1.08% 0.85% 0.97% 0.81% 1.00% Noninterest exp. to avg. assets 2.39% 2.57% 2.61% 2.69% 2.85% 2.80% Efficiency ratio (5) 55.7% 57.4% 63.2% 63.5% 67.9% 65.0% Avg. loans to average deposits 79.7% 80.8% 78.2% 76.6% 80.2% 85.7% Securities to total assets 29.1% 27.9% 28.2% 30.0% 28.1% 26.2% Average interest-earning assets to average interest-bearing liabilities 121.9% 121.0% 118.3% 118.1% 118.7% 118.8% Brokered time deposits to total deposits 7.6% 8.2% 8.8% 8.2% 9.9% 11.2%

Selected growth rates, last twelve months (6): Total average assets 55.6% 52.3% 52.0% 55.9% 59.0% 66.9% Average loans 58.3% 45.4% 40.2% 40.8% 40.8% 49.0% Total average deposits 58.2% 54.4% 58.5% 65.3% 65.1% 72.8%

Total revenue (4) 59.1% 58.2% 48.1% 73.6% 66.6% 58.8% Total noninterest expense 30.6% 39.8% 35.1% 52.2% 46.5% 31.3% Diluted earnings per share 68.3% 58.5% 104.0% 168.6% 181.7% 251.6%

Asset quality information and ratios: Nonaccrual loans $ 561 1,332 1,339 86 379 1,095 Past due loans over 90 days and still accruing interest $ 146 95 35 64 182 88 Net loan charge-offs (7) $ 918 43 25 30 (23) 15 Allowance for loan losses to total loans 1.20% 1.25% 1.26% 1.25% 1.25% 1.25% As a percentage of total loans and ORE: Past due loans over 30 days 0.37% 0.69% 0.21% 0.30% 0.48% 0.69% Nonperforming assets 0.12% 0.31% 0.38% 0.03% 0.13% 0.39% Potential problem loans (8) 0.02% 0.08% 0.11% 0.57% 0.57% 0.22% Annualized net loan charge-offs (recoveries) to avg. loans (9) 0.27% 0.04% 0.03% 0.04% 0.05% 0.08% Avg. commercial loan internal risk ratings (8) 3.9 3.8 3.9 3.9 4.0 3.9 Avg. loan account balances (10) $ 161 157 149 147 153 150

Interest rates and yields: Loans 5.58% 5.25% 5.27% 5.14% 5.17% 5.41% Securities 4.34% 4.33% 4.00% 4.45% 4.35% 3.66% Federal funds sold and other 2.72% 2.50% 2.20% 1.47% 2.26% 2.28% Total earning assets 5.12% 4.90% 4.78% 4.73% 4.83% 4.84% Total deposits, including non-interest bearing 1.56% 1.22% 1.21% 1.17% 1.21% 1.35% Securities sold under agreements to repurchase 0.85% 0.51% 0.26% 0.25% 0.58% 0.38% Federal funds purchased and FHLB advances 2.34% 2.14% 2.08% 2.19% 2.05% 2.23% Subordinated debt 4.77% 4.58% 3.54% 3.98% 3.98% - Total deposits and other interest-bearing liabilities 1.66% 1.33% 1.31% 1.29% 1.28% 1.40%

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED (dollars in thousands, except per share data)

Dec. Sept. June Mar. Dec. Sept. 2004 2004 2004 2004 2003 2003 ------ ------ ------ ------ ------ ------ Other information: Mortgage loan originations $ 17,584 22,382 16,061 10,845 10,148 14,742 Fees from origination of mortgage loans $ 378 419 266 192 178 245 Fees from origination of mortgage loans to mortgage loan originations 2.14% 1.87% 1.66% 1.77% 1.75% 1.66% Gains on sales of investment securities, net $ - 109 - 248 - 114 Brokerage account assets, at quarter-end (11) $398,000 368,000 344,000 351,000 319,000 247,000 Floating rate loans as a percentage of loans (12) 55.1% 55.8% 52.5% 52.4% 52.7% 53.7% Balance of loan participations sold to other banks and serviced by Pinnacle, at quarter end $ 57,678 53,343 58,530 54,772 51,653 45,981 Total core deposits to total deposits (13) 62.3% 61.8% 59.8% 62.8% 60.1% 55.5% Total assets per full-time equivalent employee $ 5,960 5,909 5,776 5,695 5,569 5,474 Annualized revenues per full-time equivalent employee $ 251.3 240.6 225.4 226.4 215.3 211.2 Number of employees (full-time equivalent) 122.0 116.0 101.5 95.0 89.5 83.5 Associate retention rate (14) 98.4% 97.4% 97.5% 97.4% 96.1% 95.7%

(1) Book value per share computed by dividing total stockholders' equity by common shares outstanding

(2) Capital ratios are for Pinnacle Financial Partners, Inc. and are defined as follows: Equity to total assets - End of period total stockholders' equity as a percentage of end of period assets. Leverage - Tier 1 capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets. Tier 1 risk-based - Tier 1 capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets. Total risk-based - Total capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.

(3) Net interest margin is the result of net interest income on a tax equivalent basis divided by average interest earning assets. Included in the third quarter of 2004 net interest income was $80,000 in income related to the liquidation of a particular borrower's assets. Excluding this transaction the net interest margin for the Company for the third quarter of 2004 would have approximated 3.54%. Management believes excluding this item from its net interest margin calculation is more meaningful under the circumstances as the increase in net interest income from this particular transaction is not expected to reoccur and the modified presentation of net interest margin is more comparable to prior periods.

(4) Total revenue is equal to the sum of net interest income and noninterest income.

(5) Efficiency ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.

(6) Growth rates are calculated by dividing amounts for the current quarter by the same quarter of the previous year.

(7) During the fourth quarter of 2004, the Company incurred two large commercial charge-offs of approximately $850,000 which had been previously on nonaccruing status.

(8) Average risk ratings are based on an internal loan review system which assigns a numeric value of 1 to 10 to all loans to commercial entities based on their underlying risk characteristics as of the end of each quarter. A "1" risk rating is assigned to credits that exhibit Excellent risk characteristics, "2" exhibit Very Good risk characteristics, "3" Good, "4" Satisfactory, "5" Acceptable or Average, "6" Watch List, "7" Criticized, "8" Classified or Substandard, "9" Doubtful and "10" Loss (which are charged-off immediately). Additionally, loans rated "8" or worse are considered potential problem loans. Potential problem loans do not include nonperforming loans. Generally, consumer loans are not subjected to internal risk ratings.

(9) Annualized net loan charge-offs to average loans ratios are computed by annualizing year-to-date net loan charge-offs and dividing the result by average loans for the year-to-date period.

(10) Computed by dividing the balance of all loans by the number of loan accounts as of the end of each quarter.

(11) At fair value, based on information obtained from the company's third party broker/dealer for non-FDIC insured financial products and services.

(12) Floating rate loans are those loans that are eligible for repricing on a daily basis subject to changes in Pinnacle's prime lending rate or other factors.

(13) Core deposits include all transaction deposit accounts, money market and savings accounts and all certificates of deposit issued in a denomination of $100,000 or less. The ratio noted above represents total core deposits divided by total funding, which includes total deposits, FHLB advances, securities sold under agreements to repurchase, subordinated indebtedness and all other interest-bearing liabilities.

(14) Associate retention rate is computed by dividing the number of associates employed at quarter-end less the number of associates that have resigned in the last 12 months by the number of associates employed at quarter-end.

--30--JC/na*

CONTACT: Pinnacle Financial Partners Inc., Nashville Media Contact: Vicki Kessler, 615-320-7532 or Financial Contact: Harold Carpenter, 615-744-3742 www.mypinnacle.com

KEYWORD: TENNESSEE INDUSTRY KEYWORD: BANKING EARNINGS SOURCE: Pinnacle Financial Partners Inc.

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